A strategic management framework for reformed electricity generation firms in Eastern Australia.

Skoufa, Lucas A. (2006). A strategic management framework for reformed electricity generation firms in Eastern Australia. PhD Thesis, School of Business, The University of Queensland.

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Author Skoufa, Lucas A.
Thesis Title A strategic management framework for reformed electricity generation firms in Eastern Australia.
School, Centre or Institute School of Business
Institution The University of Queensland
Publication date 2006
Thesis type PhD Thesis
Supervisor Drew Wollin
George Lafferty
Ashly Pinnington
Rick Tamaschke
Total pages 352
Collection year 2006
Language eng
Subjects L
350299 Business and Management not elsewhere classified
660100 Energy Transformation
Abstract/Summary Strategy formulation for electricity generation firms in Eastern Australia in the environment of restructuring is the focus of this thesis. The ideological basis of electricity industry restructuring around the world has been based on neo-classical economics and the specific notion that firms in competitive markets are more efficient than vertically integrated government-owned monopolies. From a strategic management perspective it is assumed that firms will attempt to create a competitive advantage and accrue above normal profits, which contrasts with the requirement of the electricity regulatory regime view that no firm will make above normal profits or exercise market power. A review of literature on the economics of electricity markets is covered in Chapter 2, and Chapter 3 discusses the key aspects of strategic management including the concepts of competitive advantage and added value; among other matters the discussion in both chapters focuses on the various generation technologies available. For a commodity such as electricity there are limited options for firms to differentiate themselves and use of appropriate technology is seen as one of the best methods to achieve this. A Governance-Strategic Choice framework is proposed in Chapter 4 from the literatures in Chapters 2 and 3 and the propositions derived in these two chapters. A background case on the restructuring and privatisation of the UKESI is included as Appendix A and provides useful material for the development of the nine propositions and this in turn has assisted in the formulation of the GSC Framework in Chapter 4. The qualitative research design of the thesis is discussed in Chapter 5. The design is based on case studies of three electricity supply industries (specifically focused on the generation sectors); Victoria, Queensland, and New South Wales in the Australian National Electricity Market. The first case study, in Chapter 6, encompasses the restructuring and privatisation of the Victorian ESI generation sector. The second case study, in Chapter 7, encompasses the restructuring and corporatisation of the Queensland ESI generation sector and the final case study, also in Chapter 7, encompasses the corporatisation of the New South Wales ESI generation sector. It is important to note that the Queensland and New South Wales governments have not yet privatised their respective electricity supply industries. A consequence of this is that some worthwhile comparisons to the privatised Victorian Lucas Skoufa - A Strategic management framework for reformed electricity generation firms in Eastern Australiaindustry have been provided with regards to the strategic behaviours and choices made by electricity generation firms in these industries. Chapter 8 provides analysis of the Governance-Strategic Choice framework (derived in Chapter 4) and the nine propositions (derived in Chapters 2 and 3) by drawing on the three case studies presented in Chapters 6 and 7. Chapter 8 concludes by presenting a section on two strategic scenarios (use of appropriate generation technologies, including environmental considerations, and bundling of products) that are based on the GSC Framework, which provides guidance for strategy formulation for use by generation firms. Chapter 9 sets out the major conclusions of the thesis. In general, generation firms have maintained a majority of coal-fired technologies since privatisation/corporatisation; this situation has changed slightly but not enough considering that in the future greenhouse gas emission limits will most likely be imposed which will disadvantage the coal-fired technologies. Furthermore, risk management has been an important managerial tool for generation firms due to the price volatility experienced in the pool based trading system; in addition, the amount of regulation and regulatory change has been excessive in some cases. The main theoretical contribution of this thesis has been to provide a framework for generation firms to make strategic choices, and highlights two scenarios emanating from this framework for creating and maintaining a competitive advantage in the restructured electricity supply industry environment. For practitioners/senior management the contribution of this thesis is that they will have a better understanding not only of their strategic choices but also the strategic choices of competitors and have the knowledge that, apart from competing on price, there are several other strategic ways through which to create and sustain a competitive advantage.

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Created: Fri, 21 Nov 2008, 14:19:16 EST